Last week, I had the pleasure of participating in the first ever Google "Hangout" - a live link between tech experts in London and Tel Aviv, bringing home an exciting discussion that began last year on an eye-opening visit with Labour Friends of Israel to the self-styled start-up nation.

Together with shadow business secretary Chuka Umunna, former innovation minister David Lammy and senior businessman Sir Trevor Chinn, and hosted by Google at their campus in East London's Tech City, we were video-linked to an expert panel in Google's Tel Aviv offices. The aim was to get to grips with how Israel has become so successful in the tech sector, and how we can work more closely together on innovation.

There is much more to this part of the world than what we see on the evening news. Israel has the largest concentration of start-ups outside Silicon Valley and, per capita, two-and-a-half times as much venture capital investment. Israel's chief scientist Avi Hasson told us last year: "In the area of innovation, government has an inherent role to play. You can't optimise the role of innovation by leaving it to the market." He invests some $500 million a year in start-ups and some 3,000 companies a year apply for help. We have a huge amount to learn from the way Israel has got the policy mix right

However, thinkers like Saul Singer, co-author of Start-up Nation, are the first to point out that there are many factors in Israel that are unique, and this is why I think this conversation should not only be about what we can do to replicate Israel's success, but also what we can do to deepen collaborative and mutually beneficial relations with Israel's innovators. And we have a solid base to work from, with around 300 Israeli companies operating in the UK, and bilateral trade reaching a record high of £3.81 billion in 2012.

So, how do we enhance collaboration? The first place to look has to be the incredible new Tech Hub based at the British embassy in Tel Aviv. Unlike traditional embassy operations, it is not simply trying to conclude trade deals, but is creating a space for British and Israeli companies, start-ups and innovators to come together, and form new and exciting collaborations.

Before I left the Treasury in 2010, I'd become fascinated with just how much economic growth was now driven by our key cities. When I think about my home city of Birmingham, I can see the great potential for innovation residing in our institutions. There is the city council, especially for the role it plays co-ordinating schools, along with our great teaching hospitals that not only save lives but break the ground of new science, our science parks that are homes to cutting-edge ideas, and our universities that are not just teaching but also researching ideas and partnering with great R&D leaders like Rolls Royce, Jaguar Land Rover and AstraZeneca.

The question for Birmingham and for other major British hubs is how we orchestrate these players into a faster pace of growth that results in more exports and more jobs. And I think we could go a lot faster if we strengthened our city-to-city links in the Middle East, especially with Israeli cities. We must also think harder about what we can do to help unlock the economic and creative potential of the Palestinian territories, starting with the exciting technology firms in and around Ramallah.

Both the UK and Israel are intensely innovative places. Britain is home to great global businesses, highly experienced at doing business internationally, especially in the key emerging markets of China and India. However, Israel is a far more entrepreneurial country, as its start-up rate shows. Together, an innovative, entrepreneurial partnership could be a powerful win-win.